The government-run insurance debate

After weeks of disagreement over a government-run, public insurance option, the Senate Finance Committee summoned leading foes and proponents of the concept Tuesday to hash out what is becoming the most critical sticking point so far in the debate over health care reform.

The discussion was cordial but ultimately inconclusive.

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Sen. Chuck Schumer (D-N.Y.) took the middle ground, proposing a government-run insurance plan that would comply with the same rules imposed on private insurers. But the insurance industry made clear that it thought the playing field could never be level with a public plan.

In turn, Karen Ignagni, president of America’s Health Insurance Plans, issued an unusual invitation for the government to heavily regulate the industry as a way to make sure it works in the public interest.

“This is truly what it is: a transparent call for a full-scale renovation and a complete overhaul of the existing regulatory mechanism,” Ignagni told reporters after the three-hour hearing.

The meeting — the second of three public forums on health care reform — did not focus as heavily on whether a public plan was necessary but rather on how to structure a government-run option that doesn’t drive private insurers from the market.

The health insurance industry has tried to blunt momentum for the idea by making concessions. It had previously offered to stop denying coverage to sick people or charging them more, and Tuesday, industry officials confirmed their intent to end the practice of charging women higher rates.

Ignagni said the industry could be trusted to expand coverage if the government created a highly regulated private insurance marketplace. She pointed to nations like Switzerland, and the Federal Employees Health Benefits Plan, as examples of how it could work.

“When the public program was developed, nobody expected the private sector would step up and say there is a problem here,” Ignagni said. “We are not asking any individual to trust us — we are asking them to trust the government.”

Schumer, however, proved to be the most outspoken skeptic of the industry’s appeal. Those who reflexively oppose the public plan, despite efforts to make it competitive with private insurers, were “close-minded,” he said.

“The bottom line is you need somebody who is not a private insurance company to be in the mix, and there are many of us who feel very strongly about that,” Schumer told the panel of 15 experts representing industry, labor, consumers and businesses. “I don’t think the public plan should have an unfair advantage, but it would be giving all of you in the insurance industry an unfair advantage not to have a public plan.”

Finance Committee Chairman Max Baucus (D-Mont.) had asked Schumer to work out the details of a potential public plan, and he returned this week with an outline.

Schumer described a plan that would adhere to the same rules as the rest of the insurance system, prevent the government from serving as “player and umpire” (meaning the administrators of the public plan must not be the regulators) and avoid pressuring hospitals and doctors that participate in Medicare to join the public plan, but that could not receive appropriations or tax revenue from the government.

Both Ignagni and Scott Serota, president of the Blue Cross and Blue Shield Association, said it would be almost impossible to envision how a government-run insurance program would not overpower the private market, force insurers out of business and reduce coverage options.

On the other end of the political spectrum, there were some in the audience who didn’t think a public plan would go far enough.

The meeting began with a protest from single-payer advocates. As soon as police escorted one advocate from the room, another would stand up, criticizing the committee for convening a panel that excluded witnesses who support creating a Medicare system for all Americans. About eight were led out of the hearing.